Finweek - Coverstory April 2010 - This is a very unfashionable real estate counter - possibly because so much of its income is derived from properties utilised by its old corporate cousin, Putco (the bus company delisted from the JSE a few years ago). Finweek recently reported it had given mixed , signals about its dividend policy by , skipping its interim payout in a bid to build its cash pile. Obviously, building a war chest for acquisitions is essential if Putprop wants to diversify its rental stream away from Putco.

But there's nothing wrong with the yield on Putprops 17-strong property portfolio (valued at around R200m), ' which generates a reliable net property rental of R30m. That comes in at around 50c/share, making for a decent net yield of 15% on a portfolio that's discounted by up to 305.

The beauty of Putprop is that - unlike most other real estate counters: - the portfolio isn't geared. Assuming there's a plan to make selective acquisitions (rather than embarking on a buying spree) Putprop should be able to . muster a rather generous annual dividend for,the foreseeable f uture. In its last financial year, Putprop distributed 32c/share, which puts it on a historic yield of 6,6%

PUTPROP In Finweek

Finweek - April 2010 - PUTPROP, the old Putco Property, is hardly a default option for investors seeking exposure to listed real estate. There may be good reason for punters to not even give Putprop a glance. For one thing, the share is rather illiquid and the company has given mixed signals about its dividend policy. lnvestors traditionally buy into real estate counters for the attractive dividend yields. However, Putprop has thrown a dividend curve ball by skipping its interim payout in the six months to end - December 2009 in a bid to retain cash. ln the previous interim period the dividend was cut - also in a bid to retain cash.

But perhaps itl worthwhile to look past immediate dividend concerns. Putprop's 17-strong property portfolio - worth R200m - generates reliable net property rentai of around R30m from mainly industrial leases linked to bus company Putco. That equates to around 50c per share - before fair value adjustments - and presents a decent net yield of 15%. Considering Putprop has negligible debt its not difficult to forecast - in the absence of any significant acquisitions (and the company is obviousiy trying to diversify its income stream) -that cash is going to pile up quite fast. ln other words, Putprop could well pay generous future dividends. Last year Putprop paid out 32c per share, which puts it on a historic yield of 6,60/o.lts share price - at 480c at the time of writing - certainly suggests some investors are confident of meaningful dividend at its financial year-end.

Fortunately, the dividend debate can be easily deferred by concentrating attention on Putprop's value proposition. lts net asset value - stated as at end-December 2009 - was reflected as 734c per share. That means its current share price is discounting PutpropS portfolio by almost 35o/o - something thatS hardly commonplace in the JSE's real estate sector. As such, we recommend Putprop as "one for the bottom drawer".